UTOPIA considering bond to build fiber-optic network

WEST VALLEY CITY — Leaders of the publicly funded company UTOPIA met in secret meetings last month and are now planning to borrow additional money for construction of the fiber-optic network.

Dave Shaw, attorney for the Utah Telecommunications Open Infrastructure Agency, said the group did not break any open meetings laws because there was never a majority of board members present. He also said board members did not discuss official business.

Jim Reams, UTOPIA executive board vice chairman, agreed and said the "summit" wasn't really a meeting at all, but more of an information session about the future of fiber needs such as public safety.

Nevertheless, UTOPIA sent out a news release this week stating that it was "gearing up for growth" and planning to add 20,000 new customers in the next several years.

The last paragraph of the page-long release mentions "the 11 pledging cities would create a new bond and release funds incrementally as demand is demonstrated."

Already, UTOPIA has twice gotten its member cities to pledge sales tax revenue for bonds to fund the system. The first round of cash was spent, but construction was hampered by poor leadership, a lack of cooperation from the federal Rural Utility Service, lawsuits by industry leader Qwest and slow sign-up rates, according to UTOPIA CEO Todd Marriott.

The project was refinanced in spring 2008, yielding $181 million to be repaid over 33 years in a balloon payment plan. But that was hampered by the sliding economy, according to UTOPIA leaders. Cities already are being asked to fork over cash annually, and their total share could reach $504 million.

UTOPIA is once again out of cash, Reams said. He couldn't give any information on the planned bonding because "details haven't been worked out."

Shaw added that UTOPIA has always known it would need cash infusions to build out the network. However, statements made during the 2008 round of financing pointed to new customers as the source of that cash.

"UTOPIA from day one has always understood the need for financing," he said. "Over $400 million was the cost from day one. That's not new, that's not earth-shattering."

For avid blogger and UTOPIA supporter Jesse Harris of White City, additional bonding is good news. He has speculated on www.freeutopia.org that the money will make the system operational much quicker. A coordinator of local meetings about UTOPIA, Harris believes that bonding could work like a property-tax lien system but in reverse.

"I think it's actually a really good idea," he said.

UTOPIA could also be trying to recoup its lost investment with the Rural Utility Service. Each of its member cities have been asked to sign interlocal agreements making them co-plaintiffs in a lawsuit against the agency, but no court documents have been filed. The cities referred all questions about the lawsuit to UTOPIA offices, but the organization has declined to comment.

e-mail: rpalmer@desnews.com